5. Wet Seal Gets Soaked
Somebody get the folks at poor
a towel because the company is obviously all washed up.
In the latest wave of bad news to crash down on the teen retailer, Wet Seal fired CEO Susan McGalla Monday, causing its shares to sink 12% to $2.60. Wet Seal also said its second-quarter loss will be a penny or more higher than the nickel that Wall Street analysts had already penciled in when it reports results August 13.
Yep, it was certainly a tough way for Wet Seal to start the week. And it didn't get any better from there. After the clothing seller announced McGalla's ousting, the Clinton Group, which owns 4.3% of Wet Seal's stock, posted a letter to Wet Seal's board urging it to peddle the company.
"We simply cannot wait for the Board to hire yet another Chief Executive -- the next one will be the fourth in five years -- to embark on yet another change in strategy with the aim of turning around the Company. That path is simply too uncertain," wrote Clinton's Senior Portfolio Manager Joseph DePerio, adding that it's also about time Wet Seal returned some of that $148 million in cash its hoarding to shareholders.
Please note -- all you conclusion-jumpers out there -- that McGalla's dismissal was the result of 11 straight months of declining same-store sales at the company and not the discrimination suit leveled against it earlier this month. In case you missed it, a trio of former employees accused Wet Seal's "most senior executives" of failing to promote black store managers because they did not represent the company's image.
Once again, as CFO Steven Benrubi told the
, the firing was "strictly due to the financial performance of the company" and had absolutely, positively nothing to do with the racism allegations.
Fine Steven! We'll drop the suit entirely. Consider it forgotten. We'll just say that McGalla got canned because Wet Seal categorically, unconditionally sucks as a retailer. So much so that its stock has lost half its value over the past year and one of its largest shareholders is itching to sell it lest they lose the remaining half.
How does that work for you?